Credit Card Interest Calculator

Updated on June 4, 2024
Article byHarsh Katara
Edited byAaron Crowe
Reviewed byDheeraj Vaidya, CFA, FRM

What Is A Credit Card Interest Calculator?

A Credit Card Interest Calculator refers to the mathematical tool that calculates the amount of interest that shall be levied when the credit card holder repays only the minimum or partial amount or doesn’t pay the full amount due. Using this calculator makes individuals identify how much they are paying as principal and interest separately.

Credit Card Interest Calculator

D * A * I * 12 / 365

  • D is the number of days that are counted from the date of purchase.
  • A is the total outstanding amount.
  • I is the interest rate per month.
number of days
total outstanding amount
rate of interest

Credit card interest is the charge that applies to individuals using credit cards. It marks the fee against the privilege of borrowing that the users receive from different service providers. This rate is also referred to or included as annual percentage rate (APR).

How Does A Credit Card Interest Calculator Work?

A credit card interest calculator is a tool designed to help credit card users calculate the interest they are liable to pay for the expenditures made using their credit cards. It is too appealing for the consumers to buy their favorite products when they get credit in hand and pay every month or delay the payment until they can budget the same. Until they repay the entire debt in full, there would be a loss to the consumer as they have to pay interest on the entire outstanding amount until that amount is fully paid. Further, they have to bear late penalty charges when the minimum amount due is also not paid by the credit card holder by the due date of the card, which is again higher charges.

Hence, one should carefully utilize the credit limit according to their credit status and repay the amount on a timely basis or at least try to pay the minimum amount due from them, avoiding paying charges but not interest.

A credit card interest calculator takes into consideration various elements before calculating the final monthly payment. These include the amount one pays per month, annual interest rate, and the balance the credit card offers to particular users. The calculation of the credit card interest depends on the average daily balance based on the daily interest rate. To determine the daily interest rate, the APR is dividend by 365 (no. of days in a year). This rate applies to everyday balance. When the APR is higher, the interest amount is higher, while when the former is lower in value, the interest amount is less.


The daily or monthly credit card interest calculator makes computations based on various factors. Let us check how the following elements influence the calculation of the credit card interest:

Grace period

This is the time period within which if the repayment is completely done, the interest becomes inapplicable. If credit card users pay the entire amount by the due date every monthly, they do not have to pay any interest on the purchases they made using the credit cards.

Average daily balance

The credit card bills show the total balance amount as calculated until the last day of the billing period. However, this is not the figure on which the interest amount is calculated. The interest charges are, instead, computed on the daily balance throughout the billing period to calculate the interest. The card issuer adds the daily balance together and then divides the same by the number of days within the period.

Interest rate

The rate of interest is mentioned as the APR. This charge is normally the annual rate, but the credit card issuers consider the charges on a daily basis. The interest here is compounded everyday, which means that the interest applied for day 1 is added to the interest applied for day 2, interest calculated for day 2 is added to the interest applied for day 3 and so on.

Number of days

The number of days for which the interest rate is to be calculated is an important factor as it does not match with the standard days or dates of a month in the normal calendar. The number of days, in this case, varies between 28 days to 31 days irrespective of belongingness to the same month. It is calculated from the date of purchase done using the credit card. The determinants that guide the calculation of these number of days include the following:

  • The number of days in that month, which could be 30 or 31 or even 29 if it’s a February.
  • The likelihood of the credit card issuer to consider weekends or holidays for closing the statement.
  • Federal regulations


The formula on which these calculators are based has been mentioned below:

Interest =  D * A * I * 12 / 365


  • D is the number of days that are counted from the date of purchase.
  • A is the total outstanding amount.
  • I is the interest rate per month.

After the introduction of plastic money, the lifestyle of people changed, and they started using credit cards especially excessively. Some used to clear the entire debt, while some used to pay the minimum amount due, and some used to pay the partial amount per their finance availability. However, they didn’t realize that if the entire amount was not paid, a heavy interest rate was charged, enhancing their debt. There could be multiple reasons for not paying the entire amount, either due to the unavailability of finance or missing the deadline to repay the credit card debt. Because of this, banks earn a large amount of interest on credit card debt since the rate of interest charged is higher than normal personal loans.

How to Calculate?

One needs to follow the below steps to calculate the Credit Card Interest.

Step #1: First, the credit card holder needs to determine the current Credit Card debt outstanding balance, which is nothing but finding out the spending done in the last credit card billing cycle and any opening balance, if any.

Step #2: Now, calculate the days since that last transaction date.

Step #3: Determine the monthly rate of interest since the credit card is billed monthly.

Step #4: Calculate the interest amount by multiplying the amount determined in step 1 by the number of days determined in step 2 and then multiplying by the rate of interest determined in step 3.

Step #5: The resultant figure will be the interest that has to be paid on credit card debt.

You can download this Credit Card Interest Calculator Excel Template here – Credit Card Interest Calculator Excel Template

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Let us consider the following instance to understand how a monthly or daily credit card interest calculator works:

Mr. Le has been using a credit card for a long period. Further, for the current credit card billing cycle, for which the due date is 6th August, he has done the following transactions:

  1. Insurance Payment $8500
  2. Bills Payment  $175

The transaction date for insurance and bill payments was made on 1st July. Mr. Le has paid 50% of the amount due by 21st July; however, the due date was 26th July.

The Bank levies a 19% rate of interest per annum.

You must calculate the interest he would be paid by 6th August.


We will first calculate the credit card outstanding balance below, assuming that there is no opening balance.

Credit Card Interest Calculator Example

Mr. Le has paid only 50% of the total amount due, which is $8,675, which is $4,337.50, and since the entire amount is not paid, Mr. Le would be liable to pay interest on the entire outstanding amount and as well on the transactions till the date of payment.

Credit Card Interest Calculator Example 1

The number of days on which interest would be paid on the entire amount of $8,675 will be from 1st July till 21st July, which is for 20 days.

Secondly, the number of days for which interest would be paid on the partial amount after 1st payment made, which is $8,675 – $4,337.50, which is $4,337.50, will be from 22nd July till 6th August, which is 16 days.

Interest per month will be 19% / 12, which is 1.58%

Credit Card Interest Calculator Example 1-1

Now we can use the formula below to calculate the interest to be paid on the credit card debt.

Interest = D * A * I * 12 / 365
Credit Card Interest Calculator Example 1-2
  • = 20 * 8675 * 1.58% * 12 / 365
  • = $90.32

Now we shall calculate interest on the outstanding balance from the 1st payment date, which is $4,337.50, till the next payment cycle, which is 6th August, i.e., for 16 days.

Interest = D * A * I * 12 / 365
Credit Card Interest Calculator Example 1-3
  • = 16 * $4337.50 * 1.58% * 12 / 365
  • = $36.13

Therefore, the total interest due for the credit cycle from 6th July till 6th Aug will be $90.32 + $36.13, which is $126.44.

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